Changing pattern of energy use in Indian agriculture and linkage between energy and commodity prices

The expenses on energy based inputs have registered a phenomenal increase since the 1990s in
Indian agriculture. The use of energy intensive inputs is higher on marginal farms than on large
farms. In view of increasing share of energy costs, this paper examined the transmission
mechanism of increase in energy prices in agricultural commodity markets in India using
monthly wholesale price indices during April 1994 to March 2014. In order to assess the effect
of deregulation of some petroleum products since April 2002, study period was divided into two
sub-periods (April 1994 to March 2004 and April 2004 to March 2014), besides analyzing for
full period. The co-integration analysis indicated evidence of parallel movement between prices
of energy and all selected agricultural commodities after deregulation, which means higher
transmission between crude oil and these commodity prices.